Southern primary exports, technological change and uneven development

Abstract

A two-region model is developed to examine the implications of trade and capital flows between the North, which produces a good which is used for consumption and investment purposes in both the North and the South, and the South, which produces a good which is used as a consumption good in the South and as a primary intermediate good in the North. The main purpose of the paper is to analyse the implications of technological change in the North which reduces its dependence on the imported intermediate good. Special attention is focused on North-South terms of trade movements and on the possibility of international uneven development.